Three Credit Card Cons To Avoid

By Cliff D'Arcy

I've recently acquired a new credit card, so I've been pestered with unwanted sales calls.

The issuer of my new credit card has called several times to offer me various add-ons and other bells and whistles. Of course, the aim of these sales calls is obvious: to boost its profits by flogging me over-priced and over-hyped products. Being a super-sceptic, I turned down every offer flat, because I know what poor value these additional products provide to customers.

For the record, here are two products which I kicked into touch, plus one other annoying charge which catches out millions of cardholders, the three Cs:

1) Credit card repayment protection (CCRP)

CCRP is a form of payment protection insurance (PPI), which is perhaps the most expensive financial product ever developed. If you are unable to work because of an accident, sickness or unemployment, PPI pays your monthly repayments on a credit card, mortgage or personal loan until you return to work, usually for a maximum of twelve months.

My new card issuer's CCRP costs 72p per £100 of my monthly balance (the equivalent of 0.72% of my balance) and pays a monthly benefit of 3% of my balance. So, on a balance of £1,000, this cover costs £7.20 a month and would pay out £30 a month. In other words, the premium charged comes to almost a quarter (24%) of the payout. Thus, if I'm not off work for more than three months of every year, this policy is worthless.

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2) Card protection plans

My card company then tried to sell me a card protection plan which provides support and assistance if my plastic cards are lost, stolen or used fraudulently. Apparently, this valuable peace of mind was on offer at a bargain price of just £29 a year.

As it happens, one of my friends is an expert in this field, having worked in marketing for one of the leading suppliers of these plans. He told me that they were even more lucrative than CCRP, which is an amazing boast! Again, I declined this service, explaining that the law only holds me liable only for the first £50 of fraudulent transactions made before notifying my card issuer, which will probably waive this liability in any event.

3) Currency-conversion charges

Later, I found that my new card's charge for foreign-currency transactions is 2.75%. In other words, for every £500 that I spend abroad or on foreign websites, this card levies an additional fee of £13.75. Hence, I won't be using it for overseas spending! For the record, the only credit cards which don't charge this sneaky fee are those issued by Nationwide BS and the Post Office. I'd steer clear of any other credit cards when shopping in currencies other than sterling.